Eurozone economy lost momentum in September 2016

Eurozone economy lost momentum in September 2016, after the indicator for growth in the private sector fell to its lowest level since January 2015. The index Purchasing Managers’ Index (PMI) fell from 52.9 in August to 52.6 points in September, which remained below market consensus expectations of 52.8 points. Any value above 50 talks about expansion, while values below 50 shows contraction of economic activity. The growth of new orders slowed to the weakest level since January 2015, showing that signs for new jobs creation disappeared. The decline for the second straight month is largely due to a slower pace of expansion of Germany.

The index in services also fell slightly from 52.9 points in July to 52.8 points in August. The average index for the third quarter reached 52.9 points, which is below the level of 53.1 points in the second quarter and gives a clear signal that Eurozone economy rather lose momentum.

The Eurozone economy ended the third quarter in a disappointing way, as the pace of expansion fell to 20-month low in September. The main picture draws weak growth of nearly 0.3% during the quarter as a whole and also clearly shows that the economic upturn is still fragile and is not able to achieve real progress. The result is hesitant to create new jobs, while employment rose by the slowest pace since April.

Individual data for countries are heterogeneous. Germany failed to meet expectations for growth for the second consecutive month because of weaker than expected growth in the services sector, but overall the data are not weak. France is doing, however, much better than expected and now led the old continent, beating Germany for the first time since 2012. In Germany, the index fell to 16 month low, while France registered the fastest growth of economic expansion since June 2015.

The overall index for France amounted to 53.3 points, which is significantly above the 51.9 points from the previous month and above the expected 51.4 points. The manufacturing index is at a level of 49.5 points is more than the expected 48.4 percentage points above the level in August of 48.3 points. The index for the French service sector is also well above expectations of 52 points at the level of 54.1 points, while in August was 52.3 points. The overall index for Germany amounted to 52.7 points (53.3 points in August), while analysts had expected a level of 53.4 points. The manufacturing index is at a level of 54.2 points – above expectations for 53.1 points, but the index for services was below expectations for 52.1 points, falling to 50.6 points.